2009 (8) TMI 372 - AT - Service Tax

Appellate Tribunal grants Cenvat credit for essential services by Airport Authority of India

The Appellate Tribunal CESTAT, Mumbai allowed the appeal, granting the appellant entitlement to Cenvat credit for service tax paid/reimbursed to the ... Cenvat credit for input services - Interpretation of 'input service' under Cenvat Credit Rules, 2004 - Services used in relation to business activities - Illustrative nature of 'such as' in statutory listInterpretation of 'input service' under Cenvat Credit Rules, 2004 - Illustrative nature of 'such as' in statutory list - Whether the definition of 'input service' in Rule 2(l) is to be read as an exhaustive catalogue or whether the examples introduced by the phrase 'such as' are illustrative and other business-related services are covered. - HELD THAT: - The Tribunal examined the two-part structure of the definition of 'input service' and held that the list of activities following the phrase 'such as' are illustrative examples and not exhaustive. The correct approach is not to construe the definition as a closed list; an activity not specifically mentioned but of a kind akin to the illustrations and related to business activities falls within the ambit of 'input service'. The Tribunal rejected the contention that the definition must be read as a whole so as to exclude business-related services not expressly listed, noting prior orders of the Tribunal in the appellant's own matters that treated the post-'such as' activities as illustrative. The determinative legal principle is that services which are of the same nature as the illustrated activities and are used in relation to business will qualify as input services under Rule 2(l). [Paras 8, 9, 10, 11, 13]The phrase 'such as' introduces illustrative examples and the definition of 'input service' is not exhaustive; business-related services of a kind similar to the illustrations are covered.Cenvat credit for input services - Services used in relation to business activities - Whether service tax paid to the Airport Authority of India for services such as landing, parking and X-ray on the appellant's aircraft is admissible as Cenvat credit where the aircraft are used for the appellant's business activities. - HELD THAT: - Applying the interpretative principle that the illustrative list is not exhaustive, the Tribunal considered the factual stance that the aircraft were used by the appellant for business purposes (conveyance between plants) and observed that the Department did not deny that these services related to business activities. In the absence of contrary evidence that the aircraft were not used for business, the services rendered by the Airport Authority of India in respect of those aircraft qualify as input services and any service tax paid on such services is allowable as Cenvat credit. The Tribunal also relied on its earlier adjudications in the appellant's other identical show-cause matters where credit was allowed, treating those decisions as applicable in the present case. [Paras 3, 11, 12, 13, 14]Service tax paid to the Airport Authority of India on landing, parking and related services for the appellant's aircraft used in its business is allowable as Cenvat credit.Final Conclusion: The appeal is allowed; the services rendered by the Airport Authority of India for the appellant's aircraft qualify as input services under Rule 2(l) and the service tax paid thereon is admissible as Cenvat credit, with consequential relief. Issues:- Entitlement to Cenvat credit for service tax paid/reimbursed to Airport Authority of India for aircraft operation services.Analysis:The appeal before the Appellate Tribunal CESTAT, Mumbai was filed against the order-in-appeal passed by the Commissioner (Appeals), Central Excise, Pune. The primary issue in question was whether the appellant is entitled to avail Cenvat credit for the service tax paid/reimbursed to the Airport Authority of India for utilizing their services in connection with the operation of the appellant's aircraft. The appellant had availed service tax credit for services such as landing, parking, and X-ray provided by the Airport Authority of India. The appellant contended that these services were used in connection with the operation of their aircraft. The Tribunal noted that previous show-cause notices on the same issue had resulted in some decisions in favor of the appellant, and the appellant sought similar relief in this case.The appellant's counsel argued that the services in question were essential for business purposes as the aircraft was used by the company's officials for conveyance between their plants. The counsel emphasized that these services were directly related to the business activities of the appellant. On the other hand, the department's representative contended that the services were not directly or indirectly linked to any manufacturing activity or clearance of final products, citing relevant legal provisions and a previous case where Cenvat credit was denied for similar reasons.After examining the definitions and legal provisions, the Tribunal found that the services provided by the Airport Authority of India could be considered part of the appellant's business activities. The Tribunal highlighted that the definition of input services includes activities related to business, and the services in question were essential for the appellant's business operations. It was noted that the appellant had used the aircraft for business activities, a fact not disputed by the department. The Tribunal emphasized that the definition of input services should be interpreted broadly, and activities related to business, even if not explicitly listed, could be covered under the definition.Based on the above analysis, the Tribunal allowed the appeal, granting consequential relief to the appellant. The decision was grounded in the interpretation of the Cenvat Credit Rules and the acknowledgment that the services provided by the Airport Authority of India were integral to the appellant's business operations, making them eligible for Cenvat credit.